ISLAMABAD, Nov 15: The exchequer may lose nearly Rs300 million in tax revenue during a single half-year season as a result of the ban imposed by the Export Promotion Bureau on export of fruits in wooden crates, according to experts.
Terming the decision as entirely unwarranted by any reasonable ground, they said over 20,000 people attached with the wooden crates industry would lose their source of livelihood. Besides, ancillary industries including nail-making industry, screen printing and chip board industry using waste of poplar wood would be affected adversely as a result of substantial drop in demand.
Apart from income tax and sales tax, the industry also pay the government forest tax, although it uses only poplar wood planted by farmers in NWFP. Discontinuation of crates as fruit packaging material would also hit the thousands of farmers catering to the crates industry.
The EPB, whose sole function is to look after exports, has banned the wooden crates in relation to export of citrus fruits and apples. The exporters of all other fruits, however, see this as a sequel to blanket ban on wooden crates as packaging material for all fruits including mangoes, which is a main export among fruits, Pakistan Apples and Citrus Export Board has cautioned.
Conglomerate of five associations of growers, processors and exporters, the board, in a communication to the EPB Chairman, said the decision was ill-conceived on all counts including the profit for exporters and producers, tax revenue and sustainability of quality fruit.
Their representatives, while talking to this correspondent in Islamabad, wondered whether EPB was allowed by its mandate to destroy other industries under the wrong pretext of promoting fruit export.
Its decision would burden the limited foreign exchange resources of Pakistan by forcing the fruit exporters to use paper cartons, the substitute of wooden crates. According to a rough estimate, the country would have to spend over $6.6 million on its import from Dubai and other countries for export of citrus fruit alone.
The situation would discourage all the small scale exporters and processors of fruits because they are unacquainted with the procedures involved in import of carton.
The possible beneficiaries of EPB’s decision would be the importers of carton, who do not have any orchards of their own and have been exporting the fruit purchased from market.
It is these businessmen who were the prime motivators of EPB’s decision, the board suspected.
During 2001-02, it stated, the country exported 121.69 million kg of kinoo and earned approximately $21.16 million. The number of wooden crates used for the purpose was 12.16 million, on the assumption that each crate contained 10 kg of kinoo.
On economic grounds too, the decision was unjustifiable, the board contended. The cost of one crate comes to Rs24.15 ($0.40). At present, the exporter earns $1.012 per crate of Kinoo. As against $0.612 per crate earned at present, the price of 10-kg carton imported from Dubai will come to $0.756.
This will reduce the grower’s profit so drastically that he may be tempted to divert to production of crops, it is feared.
There are other cogent reasons too that make the use of carton ill- advised: Kinoo is exported in refrigerator container. Due to moisture involved in refrigeration, the paper gets wet and loses its strength. The result would be a rotten kinoo arriving at its destination, involving large-scale losses for the exporters as well as bad name for Pakistan.
Some times due to adverse market conditions, the exporter has to keep kinoo in storage. In wooden cases, the kinoo’s storage life is one to two months while in carton, it is very difficult to maintain its quality, the board argued.
All other fruit growing countries including those of Far East, Europe, etc., are exporting their fruits in wooden crates. Pakistan, too, has been exporting mango in the crates, without facing any problem.